Oil Algos Confused After Iraq Rocket Strike, Crude Draw, & Product Builds

Oil prices suffered their first loss of the year today as war premia were wrung out of WTI – despite the escalating verbal threats between Tehran and Washington.

“It’s difficult for traders to keep buying on the promise of more geopolitical risk” after the Iranian incident, said Michael Loewen, director of commodity strategy at Scotiabank in Toronto.

But, for a few brief minutes tonight, the algos will turn their attention to fundamentals…

API

• Crude -5.95mm (-3.6mm exp)

• Cushing -1.0mm (-660k exp)

• Gasoline +6.70mm (+2.7mm exp)

• Distillates +6.4mm (+3.9mm exp)

After the prior week’s huge crude draw and massive distillates build, the last week saw more of the same with a bigger than expected crude draw and bigger than expected product builds…

Source: Bloomberg

WTI has erased most of the post-Soleimani spike…

…but spiked ahead of the API print after 5 rockets hit Camp Taji, north of Baghdad, only to tumble, then pop, as algos went wild…

“While there have been no additional barrels taken offline as a result of the rising conflict between the U.S. and Iran, the situation remains ever fluid,” said Michael Tran, commodity strategist at RBC Capital Markets LLC.

However, after a brief period of confusion, WTI extended gains…